This year China is commemorating the 40th anniversary of reform and opening-up. Although the country has been for years the second largest economy in the world and is expected to further grow in the future, this development has been the result of a patient, systematic and difficult process.

Forty years ago, the reform philosophy of Deng Xiaoping started to gain support in the Communist Party of China (CPC) and the December 1978 third plenary session of the eleventh CPC Central Committee gave the green light for a fundamental change of China's policies towards economic and social development. 

Other decisions made at that time included the transformation of the national economic management system and the introduction of mechanisms which provided economic incentives, the expansion of cooperation with other countries, the gradual adaptation to foreign advanced technologies, and the strengthening of scientific work, research and education. 

The ultimate objective was the achievement of modernization, which would affect several sectors including industry, agriculture and national defense. Models were tested and experimented with in specific regions, and – if successful – would be applied elsewhere. The special economic zone concept was a characteristic example. 

The years after 1978 saw China change the organization of farming and introduced the household responsibility system, and the liberalization of some enterprise pricing and wage setting, as well as trade later. The reform and opening-up paved the way for the country to enter the WTO in 2001. 

Since then, China has significantly integrated into the global trading system. The substantial reduction of tariffs and the gradual removal of restrictions for the domestic distribution of products became a requirement. Non-discrimination and opening up principles for foreign companies also had been respected by the successive Chinese governments. 

Already from the 30th anniversary of reform and opening-up results were impressive. Ten years ago China was nothing short of an economic miracle attracting international attention for its achievements. At that stage, its economy was growing at an average of 9.8 percent since the launch of the process. 

The fundamental difference was that its national economy was welcoming the role of market forces. This had been inconceivable before the December 1978. In addition, China had gone from a position of having virtually no foreign investment to one of acting as a global recipient of foreign investment. 

The miracle is continuing in 2018 in more qualitative terms. The numbers are different in comparison to 2008 as China's growth rate is lower and is now vacillating between 6 and 7 percent. This is not an unexpected drop. By contrast, it goes in line with President Xi Jinping's policy to place emphasis on sustainable growth and implement the so-called "New Normal" model. 

Since the collapse of Lehman Brothers in 2008 and the outbreak of the European debt crisis in 2010, China has turned out to be resilient but has also decided to take precautionary measures in order to be less susceptible to potential new crises in the future. Temporary problems such as the 2015 stock market fall have been subsequently overcome. 

Within this context, the reform and opening-up process remains the cornerstone of China's economic development. A few weeks ago, for instance, international media largely reported on the determination of the Chinese government to speed up the pace of ownership reforms for banking, securities, futures, asset management and insurance sectors, shifting the timeline for implementation from years to just months.  The 2018 Boao Forum was a reference point in that regard. 

In 1978 almost no one imagined how much economic and social progress China would make in the next 40 years as a result of deciding to embark on its economic reforms and to introduce open-door policies. The combination of market forces with the preservation of the socialist nature of the economy has yielded impressive results.  

While China is currently facing new world challenges stemming from a new wave of protectionism, its own successful course is irreversible. The study of history and the vision for the future are leading to more and deeper reform and opening-up.

George N. Tzogopoulos is a columnist with China.org.cn. For more information please visit:

http://www.china.org.cn/opinion/GeorgeNTzogopoulos.htm

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